Default interest - GMRA Provision

GMRA Anatomy™ →Go uptown In a Nutshell™ Clause 10(f): 10(f) The Defaulting Party must pay the non-Defaulting Party its reasonable professional expenses incurred in connection with an Event of Default plus interest calculated at LIBOR or, if the expense relates to a particular Transaction, the higher of LIBOR and the Pricing Rate for that Transaction. view template Global Master Repurchase Agreement full text of Clause 10(f): 10(f) The Defaulting Party shall be liable to the non-Defaulting Party for the amount of all reasonable legal and other professional expenses incurred by the non-Defaulting Party in connection with or as a consequence of an Event of Default, together with interest thereon at LIBOR or, in the case of an expense attributable to a particular Transaction, the Pricing Rate for the relevant Transaction if that Pricing Rate is greater than LIBOR. view template Resources: 2010 GMRA: Full wikitext · Nutshell wikitext Navigation 2000 GMRA Table of Contents · 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · Schedule · Equities Annex: EA 1 · EA 2 · EA 3 · EA 4 · EA 5 · Buy/Sellback Annex · BSA 1 · BSA 2 · BSA 3 · BSA 4 · BNA 5 Index: Click ᐅ to expand: GMRA Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Compare with Clause 4(f), which is the standard interest payable on the cash leg of a Transaction.

This is default interest, where things have gone Pete Tong for one party and the other has referred matters to its learned friends. In theory, this provision references the dreaded LIBOR — cue obligatory reference to the dramatic look gopher — and is thus in scope for LIBOR remediation, but in practice the question is this:

Is the world going to go any further towards hell in a hand-basket if there is confusion about the interest rate which you charge on the accrual of your legal fees?

Respectfully — given that, on the theory of the game your Counterparty is already smoking ruin; thus, you are already in hell, in a hand-basket — the JC respectfully submits it will not.

GMSLA equivalent

The corresponding 2010 GMSLA provision (clause 11.7) is similar in effect, and in its potential LIBOR impact.

DLG

And now: A quick dramatic look gopher.

See also

• Clause 4(f) — Interest on Cash Margin
• LIBOR